Connect with us

Reports

MENA: Unemployment, Governance Challenges and Energy Price Shocks Seen as Major Risks

MD Staff

Published

on

Business leaders in the Middle East and North Africa view economic and governance issues as the primary risk in the region, but may underestimate the risk of climate change. That is the finding of a new analysis of regional risks by the World Economic Forum published today.

The Middle East and North Africa Risks Landscape comes at a pivotal time, as the Fourth Industrial Revolution and geopolitical fractures combined with economic and security challenges within some countries are creating a complex risk environment for the region. The analysis looks at the impact on the region of the global risks of geo-economic division and climate change, and of state-specific risks of unemployment, non-diversified economies, governance challenges and terrorism.

The analysis draws on data from the Forum’s Global Risks Perception Survey 2018-2019, in partnership with Marsh & McLennan Companies and Zurich Insurance Group. The survey polled 916 experts and decision-makers across the world, and approaches risk from the standpoint of global stakeholders and regional business leaders.

Global respondents to the Global Risks Perception Survey 2018-2019 ranked “economic confrontations between major powers” as the greatest risk for 2019 and climate-change-related issues as the leading risks over the next 10 years. Both issues hold risk for the MENA region, home to trade-dependent economies as well as coastal ports that would be adversely affected by rising sea levels caused by climate change.

In addition, the analysis draws on data found in the Forum’s Executive Opinion Survey 2018, which polled 12,548 business leaders from around the world, including those in 15 MENA countries: Algeria, Bahrain, Egypt, Islamic Republic of Iran, Israel, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, United Arab Emirates and Yemen.

Notably, business leaders in the MENA region who responded to the Executive Opinion Survey did not rank environmental change as a risk to doing business – a potential blind spot given the potential implications of global warming. Instead, business leaders ranked economic and governance-related issues – “energy price shocks” and “unemployment or underemployment” – as well as “terrorism” as the top three risks to doing business in the region.

“In today’s interconnected world, risks no longer stop at borders on a map or are confined to one industry in an economy,” said Mirek Dusek, Deputy Head of the Centre for Geopolitical and Regional Affairs and Member of the Executive Committee at the World Economic Forum. “Because global risks are shaping regional landscapes and vice versa, it is important to take a ‘glocal’ approach to risk assessment. Our analysis offers a combination of global and local analysis so that stakeholders can gain a better understanding of what is necessary for risk mitigation and resiliency.”

The analysis is being released as more than 1,000 global and regional leaders gather at the Dead Sea in Jordan for the World Economic Forum on the Middle East and North Africa, taking place on 6-7 April. The meeting is held in partnership with the King Abdullah II Fund for Development (KAFD), and offers the opportunity to address the risks spotlighted in the analysis, many of which require multilateral cooperation across regions and industries to solve.

Continue Reading
Comments

Reports

Africa: Urgent action needed to mobilise domestic resources as tax revenues plateau

MD Staff

Published

on

The average tax-to-GDP ratio for the 26 countries participating in the new edition of Revenue Statistics in Africa was unchanged at 17.2% for the third consecutive year in 2017. This was lower than the averages for Latin America and the Caribbean (LAC) at 22.8% and for the OECD at 34.2%, underlining the need for urgent action to enhance domestic revenue mobilisation in Africa.

The 26 countries covered in Revenue Statistics in Africa 2019, released today in Tunis at the African Union’s 13th Session of the Committee of Directors-General of National Statistics Offices, represent nearly three-quarters of Africa’s GDP. The report shows that tax-to-GDP ratios varied widely across these countries in 2017, ranging from 5.7% in Nigeria to 31.5% in the Seychelles. This fourth edition has grown from 21 to 26 countries and includes Equatorial Guinea, Madagascar, Mauritania, Nigeria and the Seychelles for the first time.

While tax revenues plateaued as a percentage of GDP for the Africa (26) in 2017, non-tax revenues (primarily rents and royalties from natural resources, as well as grants) continued to decline and were lower than tax revenues in all but three of the 26 countries: Botswana, the Republic of the Congo and Equatorial Guinea. Between 2010 and 2017, an increase in tax revenues equivalent to 1.9% of GDP on average was offset by a decline in non-tax revenues from 7.5% of GDP to 5.7% of GDP.

African economies continue to rely heavily on taxes on goods and services, which accounted for 53.7% of total tax revenues across the 26 countries. Within this category, value-added taxes (VAT) accounted for 29.4% of total tax revenues. Meanwhile, corporate income taxes (CIT) generated 18.6% of total tax revenues – a higher proportion than in LAC and in the OECD – and were equivalent to 2.8% of GDP in 2017. This is the same level as in 2016, halting the decline in CIT as a percentage of GDP since 2013.

Overall, the tax structure across participating countries has evolved over the past decade, with VAT and personal income tax (PIT) accounting for a higher proportion of revenue generation in 2017 relative to 2008, on average. However, PIT (15.4% of total tax revenues) and social security contributions (8.1% of total tax revenues) remain low in Africa. Reforms to broaden the personal tax base, remove harmful and regressive subsidies, and expand social insurance coverage can assist in domestic resource mobilisation efforts while contributing to inclusive growth.

Enhancing the efficiency of VAT systems can also provide higher and more sustainable revenues, and improve distributional or environmental outcomes. Environmental taxes are found to represent a small but increasing share of tax revenues in Africa and can have an important role in raising revenues and encouraging the transition to a low-carbon economy. Property taxes are shown to be much lower in Africa than in LAC and in the OECD but have the potential to play a key role in funding better local services. Equally, improvements in governance and spending may also lead to higher revenues by improving tax morale and making citizens more willing to pay taxes.

A special feature assesses the potential impact of the African Continental Free Trade Area (AfCFTA) on the level and structure of tax revenues, drawing on the detailed data on these revenues in this report. While AfCFTA is likely to strengthen Africa’s economic growth and increase tax revenues in the medium-to-long term, the elimination of taxes on trade within the region will likely reduce revenues in the short term. Trade taxes accounted for 11.8% of total taxation on average in 2017 across the 26 countries in this report.  Low-income and least developed countries in the region tend to rely more on trade taxes and are more vulnerable to the short-term impact of reduced trade taxes, underlining the importance of the flexibility mechanisms envisaged by the AfCFTA.

Revenue Statistics in Africa is a joint initiative between the African Tax Administration Forum (ATAF), the African Union Commission (AUC) and the Organisation for Economic Co-operation and Development (OECD) and its Development Centre, with the technical support of the African Development Bank (AfDB), the World Customs Organisation (WCO) and the Cercle de Réflexion et d’Échange des Dirigeants des Administrations fiscales (CREDAF) and the financial support of the European Union.

Continue Reading

Reports

Brazil must immediately end threats to independence and capacity of law enforcement to fight corruption

Newsroom

Published

on

The OECD Working Group on Bribery urges Brazil, one of the founding Parties to the Anti-Bribery Convention since 1997, to preserve the full capacity and independence of law enforcement authorities to investigate and prosecute foreign bribery and corruption. Despite being recognised by the Working Group for its significant anti-corruption enforcement efforts following its previous evaluation in 2014, there are now concerns that Brazil, due to recent action taken by the legislative and judiciary branches, risks backsliding on progress achieved, that could seriously jeopardise Brazil’s ability to meet its obligations under the Anti-Bribery Convention.

The Working Group has continuously alerted Brazil since 2016 of risks posed by attempts to broaden the definition of what constitutes abuses of authority by judges and prosecutors. Despite these warnings, a Law on abuses of authority (13. 869/2019) characterised by vague concepts will enter into force in January 2020. The Working Group has also expressed concerns that, following injunctions of the Supreme Court, limitations on the use of reports by Financial Intelligence Unit, Federal Revenues and other administrative agencies in criminal investigations might seriously hamper Brazil’s ability to detect and effectively fight corruption. This, combined with other actions by the Supreme Court and the Federal Auditor’s Court that are likely to have an effect on concluded foreign bribery cases, could constitute a serious push back in Brazil’s exemplary fight against corruption.

On 12-13 November 2019, a High-Level Mission of the OECD Working Group on Bribery discussed these issues in Brasilia with Minister of the Office of the Comptroller General Wagner de Campos Rosário, Minister of Justice Sérgio Moro, Attorney General André Mendonça, Deputy Prosecutor General of the Republic Hindemburgo Chateaubriand, President of the Supreme Court José Antonio Dias Toffoli, Senator Marcos do Val, as well as with the Chair of Brazil-OECD Parliamentary Group and Leader of the Government Deputy Vitor Hugo along with members of this Group. However, the High-Level Mission could not meet as scheduled with Prosecutor General of the Republic Augusto Aras, and with the Presidents of the Commission of Constitution and Justice of both the Chamber of Deputies and the Senate.

“Despite disappointing last minute cancellations of key high level representatives, we appreciate the readiness of the Brazilian authorities to meet with us to discuss outstanding issues related to law enforcement capacity and independence in foreign bribery cases,” said Drago Kos, Chair of the Working Group on Bribery. “However, we are quite alarmed that what Brazil had managed to achieve in recent years in the fight against corruption may now be seriously jeopardised. Brazil must strive toward reinforcing its framework and legal tools to fight foreign bribery, not weaken them.”

“The OECD high-level mission is a relevant initiative, as it brings a comprehensive analysis of the landscape of the fight against corruption in the country” said Minister of the Office of the Comptroller General Wagner de Campos Rosário. “Brazil has evolved considerably in recent years in the fight against corruption. The enactment of the corporate liability law (Law 12.846/2013), the establishment of leniency agreements, and the adoption of integrity plans in federal agencies and entities are important progresses. Nonetheless, this is a continuous process of improvement and we will always be seeking to improve our controls and mechanisms to combat the evil of corruption, thereby ensuring the delivery of better quality public services to citizens.”

Continue Reading

Reports

Austria: Reforms will be necessary to uphold high well-being levels

Newsroom

Published

on

Austria stands out for its high levels of economic and social well-being. Preserving these will require reforms to improve competition in the service sector, increase access to risk capital for firms of all sizes, encourage more women and migrants into the workforce and lengthen work lives to reflect the ageing population, according to a new OECD report.

The latest OECD Economic Survey of Austria, presented in Vienna by the OECD’s Director of Country Studies Alvaro Pereira, projects GDP growth of 1.4% for 2019 and 1.3% for 2020. The 2020 projection is down from 1.6% forecast by the OECD in May, though the 2019 projection is unchanged, as recruitment bottlenecks, weakening external demand – especially from key markets Germany and Italy – and global trade tensions dampen Austria’s outlook.

The report’s key recommendations include linking the retirement age to life expectancy, which has risen steadily while Austrians are still retiring much earlier than the OECD average. The effective retirement age in Austria is notably lower than in neighbouring Germany and Switzerland. Austria’s labour participation rate is also low, especially among older women.

To increase the incentives to stay in work, the report recommends Austria do more to reduce its high levels of tax and social security on labour income, particularly for low earners, relative to most other OECD countries. This could be balanced by shifting to alternative sources of taxation such as environmental, consumption, inheritance and wealth taxes.

Reducing barriers to entry in key sectors ranging from service professions and specialist manufacturing to rail and freight transport and pharmaceutical distribution could bolster competition and economic dynamism. The small and medium-sized businesses that dominate Austria’s economy would benefit from greater access to venture capital and a better developed equity market. A reform planned by the outgoing government to address the debt-bias in the corporate tax system would help level the playing field between debt and equity financing.

The report recommends making access to quality childcare, early childhood education and all-day schooling for older children a legal entitlement throughout the country, to make it easier for new mothers to return to work and improve their career prospects. While this is a challenge given Austria’s geography, it would also contribute to more equal opportunities in the education system.

Austria has one of the highest shares of migrants in its workforce of OECD countries. This means migrants play an important role in meeting robust demand for labour yet the country also has a major challenge in trying to integrate low-skilled immigrants. Increasing the availability of language courses and adult skills training would help to address this.

The report also calls for Austria to increase its focus on environmental issues, for example by increasing carbon prices, which are low by international standards, and improving town planning to address the rising environmental impact of urban sprawl.

Continue Reading

Latest

Reports2 hours ago

Africa: Urgent action needed to mobilise domestic resources as tax revenues plateau

The average tax-to-GDP ratio for the 26 countries participating in the new edition of Revenue Statistics in Africa was unchanged at 17.2%...

Europe4 hours ago

U.S. President Trump to meet Bulgaria’s Prime Minister at the White House: What to expect?

Next Monday, 25 November, President Trump will welcome Bulgarian Prime Minister Borissov at the White House for a bilateral meeting....

Americas5 hours ago

Poll Shows Trump’s Israel Policy Is Opposed Even by Republicans

On Monday, November 18th, Reuters headlined “U.S. backs Israel on settlements, angering Palestinians and clouding peace process” and reported that,...

Africa8 hours ago

The Geopolitics of natural resources of Western Sahara

In the post-bipolar international legal literature, the right to self-determination is part of the broader concept of human rights, and...

Economy9 hours ago

Doing Business Report 2020: Soaring Changes with Soaring Doubts

As Narendra Modi brands his government of making new leaps; similarly, the World Bank’s annually published report, “Doing Business” has...

Travel & Leisure11 hours ago

The Art of Travelling Alone: How to Make the Best of Your Solo Trip

We are currently celebrating Singles’ Day — now one of the biggest shopping holidays of the year — which encourages...

Defense13 hours ago

Is this the end of NATO-era?

Money is a very powerful tool, which can easily ruin relations. Different views on money spending can ruin even good...

Trending

Copyright © 2019 Modern Diplomacy